Market Data as of Week Ending 06/12/2020 unless noted otherwise.
U.S. stock prices retreated and recorded their worst weekly decline in almost three months. Market leadership reversed as cyclical sectors such as energy, financials, industrials, and materials underperformed while stocks in defensive and higher growth sectors outperformed. Small and medium sized businesses underperformed as investor sentiment shifted away from higher risk assets. Developed foreign stocks in Europe and Asia outperformed U.S stocks for the second consecutive week and Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields declined for the week as concerns about the pandemic were priced into financial markets. Higher quality bonds such as government and investment grade corporate bonds outperformed, while high yield lagged. Investment grade corporate bonds are yielding approximately 2.3% and high yield corporate bonds are yielding more than 6%.
Initial jobless claims rose by 1.5 million last week and there are nearly 21 million Americans claiming ongoing unemployment benefits. The Federal Reserve announced that as their baseline expectation, there will be no interest rate increases through 2022.
Market Data as of Week Ending 05/29/2020 unless noted otherwise.
Stocks advanced for the second consecutive week as both investor and consumer sentiment improved. A combination of cyclical sectors (Financials, Industrials, and Materials) and defensive sectors (Real Estate and Utilities) outperformed. Small and medium sized businesses also delivered solid gains. Companies in the S&P 500 are expected to finish the first quarter with an earnings decline of nearly 15% and the consensus forecast for calendar year 2020 is a decline of more than 20%. Developed foreign stocks in Europe and Asia outperformed U.S stocks during the week, but Emerging Market stocks lagged developed foreign markets.
U.S. Treasury yields were mixed for the week as short and intermediate term bond yields narrowly declined while longer term yields nudged higher. For the second consecutive week, investment grade corporate bonds outperformed government bonds, while high yield was the top performing asset class. Investment grade corporate bonds are yielding approximately 2.5% and high yield corporate bonds are yielding nearly 7%.
Initial jobless claims rose by another 2 million last week; however, continuing claims dropped to 21 million recording the first decline since the coronavirus pandemic began. As states begin to let businesses reopen, U.S. consumer sentiment posted a surprise gain in the preliminary May report. Europe and Japan announced additional stimulus measures, but that news was overshadowed by rhetoric from U.S. and Chinese officials threatening the trade deal reached earlier in the year between the two countries.
Market Data as of Week Ending 05/01/2020 unless noted otherwise.
Stock prices were mixed for the week as local and state governments across the U.S. begin to relax social distancing and reopen parts of their economies. Small and medium sized businesses outperformed their larger counterparts for the second consecutive week. The S&P 500 Index gained 13% in the month of April which its was best monthly return since 1987. Developed foreign stocks in Europe and Asia posted strong gains for the week and Emerging Market stocks outperformed developed foreign markets.
U.S. Treasury yields were also mixed for the week as short-term bond yields declined while long-term yields increased. Corporate bonds, including below investment grade, outperformed as investor demand increased for higher yielding credit. Investment grade corporate bonds are yielding more than 2.5% and high yield corporate bonds are yielding more than 8%.
Jobless claims rose 3.8 million last week, bringing the total to more than 30 million Americans (approximately 18% of the U.S. working population) who have filed initial claims for unemployment insurance since the COVID-19 crisis began. In an advanced estimate, the U.S. reported that gross domestic product (GDP) decreased at an annual rate of 4.8% in the first quarter of 2020. Not surprisingly, the largest detractor was a drop in consumption of -7.6%. On a positive note, China has reported that Wuhan, where the pandemic began, has no remaining cases of COVID-19 in its city hospitals.
- Big Picture: Economic and Investing
- Mini Cycles and Investment Strategy in a Trendless World
- Investment Process
- Risk Management and Sell Discipline
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